Should Africa Adopt a Shared Currency? And Should It Be Bitcoin?

By Megan Garber

I wrote on Monday about Sweden's move toward an ever-more-cashless society: The country is pointing the way -- with other European and North American countries following its lead -- toward ever-more-digital financial transactions.

Rüdiger Koch, a German software developer, wants to expand the cash-reduction trend to Africa. But he wants to take things a step further, too: Koch -- who is also a consultant to the bitcoin exchange Intersango -- argues that Africa should adopt a euro-style shared currency. And that that currency should be the Bitcoin.

An article in Technology Review explores the validity of Kock's arguments. "In the United States and Europe," Tom Simonite reports, "Bitcoin's meteoric rise was mostly driven by speculators; hardly anyone used the currency to actually pay for goods and services." The currency's exchange value has plummeted -- from $30 last summer to around $5 right now. In February, Tradehill -- the largest exchange where Bitcoins could be traded for dollars -- closed, citing "increasing regulation."

A Bitcoin economy might have better luck in Africa, though, Koch argues. The countries of Africa, after all, tend to differ from the U.S. and those of Europe in two significant ways: First, their centralized banking systems are (generally) weak. Despite quick growth in nations like Kenya and Nigeria, cash transactions are still standard -- "particularly," Simonite notes, "in rural areas where there are no ATMs and few people have bank accounts."

So people are already carrying the tools that could facilitate Bitcoin-based exchanges, Koch notes. From there -- and particularly as prices for the phones that use Google's Android software continue to drop -- "the Bitcoin community," Koch argues, could create open-source technology that builds on mobile operating systems to create Bitcoin-based apps. Koch imagines "a design similar to the Bitcoin for Android app, which allows one person to transfer bitcoins to another by using a phone to snap a photo of a 2D bar code or QR code on the screen of another phone" -- creating a society and an economy in which "people could exchange money when they meet on the street."